Correlation Between Align Technology and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Align Technology and Sumitomo Mitsui at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Align Technology and Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Align Technology and Sumitomo Mitsui and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Align Technology with a short position of Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and Sumitomo Mitsui.
Diversification Opportunities for Align Technology and Sumitomo Mitsui
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Align and Sumitomo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial and Align Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Align Technology are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Align Technology i.e., Align Technology and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Align Technology and Sumitomo Mitsui
Assuming the 90 days trading horizon Align Technology is expected to under-perform the Sumitomo Mitsui. But the stock apears to be less risky and, when comparing its historical volatility, Align Technology is 1.07 times less risky than Sumitomo Mitsui. The stock trades about -0.3 of its potential returns per unit of risk. The Sumitomo Mitsui Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,522 in Sumitomo Mitsui Financial on November 28, 2024 and sell it today you would earn a total of 316.00 from holding Sumitomo Mitsui Financial or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Align Technology vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Align Technology |
| Sumitomo Mitsui Financial |
Align Technology and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and Sumitomo Mitsui
The main advantage of trading using opposite Align Technology and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, Sumitomo Mitsui can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Align Technology vs. Electronic Arts | Align Technology vs. Check Point Software | Align Technology vs. Verizon Communications | Align Technology vs. JB Hunt Transport |
| Sumitomo Mitsui vs. United Natural Foods, | Sumitomo Mitsui vs. Cardinal Health, | Sumitomo Mitsui vs. UnitedHealth Group Incorporated | Sumitomo Mitsui vs. CVS Health |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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